CREDIT: Jessica Rinaldi/Reuters
The Los Angeles Times’ Chad Terhune profiles Jennifer Harris, a self-employed lawyer in California who “has been paying $98 a month for an individual health insurance plan that provides less coverage than the Affordable Care Act requires.” As a result, her policy will soon be cancelled and Harris will have to spend at least $238 a month for insurance that meets the minimum benefits outlined in the law. Her family earns too much to qualify for subsidies, meaning she will have to pay approximately $140 more per month for insurance.
It’s hard to know exactly how many Americans will find themselves in this situation, but approximately half a million policyholders across the country have received cancellation letters from insurers, undermining President Obama’s promise that you can keep the coverage you have and save thousands of dollars doing so.
So what gives?
Under the law, policies in existence before the law went into effect on March 23, 2010, are exempt from the new minimum benefit requirements absent major changes. But some of the individual plans issued since, still offer skimpy benefits, very high out-of-pocket spending or have annual and lifetime limits. They’re designed to attract younger and healthier beneficiaries — who rarely use the coverage they purchase at those attractively low premium rates — but don’t provide comprehensive insurance should one actually fall ill or need to use care.
Harris, who is three months pregnant, and will soon need maternity coverage, doesn’t fall neatly into that description, however. Terhune explains in an email that her current plan includes maternity care, but has substantial cost sharing requirements associated with it. Her maximum out-of-pocket cap is actually very similar to the $6,350 cap in a Silver policy.
On balance, Harris will probably receive more coverage than she does today and will have to pay more for it every month. Her total medical expenses, however, could be lower, since the new plan will cover more health care services for her and her baby, potentially saving thousands in additional medical expenses. And now – thanks to the law – her pregnancy will not be used against her as a pre-existing condition when she’s applying for coverage.
Indeed, Harris’ $98 premium is the result of the very kind of medical underwriting that allowed insurers to charge relatively healthy people a lot less for insurance and exclude sicker people altogether. Those practices are outlawed by reform. Insurers will no longer keep sicker people form signing up for insurance or charge older people more than three times the rates of younger and healthier applicants and offer benefits in 10 broad categories of coverage. Since many insurers are anticipating more sicker people to sign up for care and are now offering more benefits, premiums are comparatively higher, though competition among plans has shown to lower rates.
But ultimately, the decision over whether to cancel coverage is that of insurers. They have the option of incorporating the new minimum standards into their plans (to ensure compliance), though some may still cancel policies in an effort to shed some of the sickest and costliest beneficiaries or push people into different plans.
During an appearance on NBC’s Meet The Press on Sunday, Pat Geraghty, CEO of Florida Blue, put it this way, “[W]e’re not cutting people, we’re actually transitioning people. What we’ve been doing is informing folks that their plan doesn’t meet the test of the essential health benefits, therefore they have a choice of many options that we make available through the exchange.
“And, in fact, with subsidy, many people will be getting better plans at a lesser cost. So this really is a transition. And in fact, the 300,000 figure is the entire year. So it’s really 40,000 people for January 1, and we’re walking them through that transition,” he added.
Call it “transition” or “cancellation,” most individuals will qualify for subsidies and will likely see savings in their new plans. Harris, however, who for years has benefited from a system that kept sicker people out, could now pay more for a structure in which everyone — including her — can always buy comprehensive coverage.
An analysis of the 36 federally-run exchanges finds that 46 percent “of single young adults who are uninsured and may be eligible for coverage in the Health Insurance Marketplace could get coverage for $50 or less per month or less.” Sixty-six percent could buy coverage for $100 or less.